The Law entered into force on September 7, 2021

Since the Law came into force, merchants and consumers are now able to acquire goods and services using Bitcoin as legal tender.

Companies dedicated to providing services within the Bitcoin ecosystem will provide the means to convert money, have access to the payment gateway and digital wallets, among others, and must adhere to the current legal framework for the realization of these activities.

The main point of the Bitcoin Law is the regulation of Bitcoin as legal tender, unrestricted with liberating power, unlimited in any transaction and in any capacity that legal persons or entities, public or private, require to carry out.

Other relevant points of the Law that should be highlighted are:

• It is established that the exchange rate between Bitcoin and the dollar of the United States of America (the “dollar”) will be freely determined by the market
• Tax obligations may be paid in Bitcoin, and all economic agents must accept Bitcoin as a form of payment when it is offered by the person who acquires a good or service.
• The only exclusion to the obligation to accept Bitcoin as a form of payment is related to those who, due to a well-known fact and in an evident way, do not have access to the technologies that allow executing transactions in Bitcoin.
• All financial obligations expressed in dollars existing prior to the Law’s entry into force may be paid in Bitcoin.

Based on the fact that Bitcoin, as of September 7, 2021, is legal tender in El Salvador, certain complementary regulations have been issued to the Law for its implementation and operation:

1. Regulation of the Bitcoin Law
2. Bitcoin Trust Creation Law
3. Technical Standards to Facilitate the Participation of Financial Entities in the Bitcoin Ecosystem
4. Guidelines for the Authorization of the Operation of the Technological Platform of Services with Bitcoin and Dollars
5. Temporary Technical Standards on Cybersecurity measures and Customer Identification in Digital Channels

Recently, El Salvador has been in the sights of different service providers related to the Bitcoin ecosystem, as well as investors who want to carry out these operations through this currency. Many companies that operate in the cryptocurrency industry, and the services and products related to them, have arrived in El Salvador. The government of El Salvador is open to providing support for the establishment of these companies.

The uncertainty of something new has generated different positions. It is evident that good work is being carried out, generating jobs, and attracting tourism and foreign investment as a direct result of the Bitcoin Law. Little by little, the opinion will change towards the positive.

The Bitcoin Law is just the start of what is rapidly becoming a crypto industry for which El Salvador will serve as its hub. DeFi companies, NFTs, software technology providers related to Bitcoin and cryptoactives and hardware providers, such as ATMs, have also found a suitable place in El Salvador to invest.

To establish a company in El Salvador, two partners (legal persons or entities) are required, present their passport or legal documentation of the partner company, to obtain the Salvadoran NIT (tax identification), and a minimum investment capital of $2,000.00 to operate as a company. It is also possible to trade as a sole trader.

There are no special requirements to create your company if it will be dedicated to activities related to Bitcoin. Only those companies that seek to become suppliers for the Salvadoran State need to register with the Central Reserve Bank, which is a simple process.

Transactions made in Bitcoin do not pay tax on the transfer of capital from one country to another, nor do earnings on Bitcoin generate tax. The government is currently promoting a package of laws to make it easier to obtain residency and eventual Salvadoran citizenship.

The government entities to which you can refer for the operation of your business are: the Ministry of Economy, SIGET – General Superintendence of Electricity and Telecommunications, Ministry of Labor, Ministry of Tourism, Foreign Ministry, Bandesal – the Development Bank of El Salvador, the Ministry of Commerce and Investments and the Ministry of Innovation, among others. All of them are very accessible and provide information and advice to investors.

No, it is not prohibited and it is possibly within the package of regulations that the State has prepared to continue promoting said initiatives.

No, currently it is not possible to deposit Bitcoin in traditional banking, however, using the Chivo wallet has the advantage of being able to facilitate transfers of Bitcoin from Chivo to a bank without any inconvenience.

As an individual it is not currently possible, but as a company or business it is possible.